The Oneida Indian Nation is moving its cigarette-manufacturing plant from Western New York to Nation land in the city of Oneida – bringing 15 jobs and continued controversy along with it.
The decision is largely in response to a state law taking effect Sept. 1 that aims to collect taxes from cigarettes sold by Indian enterprises to non-Indians, said Peter Carmen, chief operating officer for Oneida Nation Enterprises.
Carmen said the move probably would have eventually happened anyway, but it is being done now because the Nation believes federal law makes it clear that taxes can’t be collected on cigarettes that are both manufactured and sold on Nation land.
If distributors use the state law to try to imbed taxes on other cigarette brands, the Nation will not be selling those brands, Carmen said.
“The Oneida Nation views that as an affront to its sovereignty,” he said.
When Sept. 1 arrives, the Nation’s SavOn stores will still be selling an inventory of brand-name cigarettes on which the Nation believes state taxes would not apply because they’ve already been purchased from distributors, Carmen said. But once the inventory runs out, it’s unclear what the Nation will do other than sell its own cigarettes, he said.
Gov. David Paterson’s office issued an e-mailed statement Wednesday in response to questions about the Nation’s decision.
“Today’s announcement does not in any way affect our intention to proceed with the implementation of the law on Sept. 1st,” Paterson spokesman Morgan Hook said. “Gov. Paterson will continue with his stated policy of negotiation, litigation and implementation of the laws of New York when it comes to all dealings with New York’s sovereign Indian nations.”
The state Department of Taxation and Finance has no comment on the Nation’s announcement, department spokesman Brad Maione said Wednesday.
City of Oneida Mayor Leo Matzke could not be reached Wednesday and Madison County attorney S. John Campanie said he has no comment because he wants to first look further into the issue.
The state law
The law taking effect Sept. 1 will charge cigarette taxes to distributors – resulting in the distributors placing tax stamps on the cigarettes – and offer the distributors the ability to apply for reimbursement from the state, Maoine said. The businesses selling the cigarettes will then be required to charge taxes on the cigarettes, he said.
Indian tribes will receive a set number of non-taxed cigarettes based on population and typical consumption statistics, Maione said. State statistics show that there are 1,473 members of the Oneida Indian Nation, and that more than 31,000 packs of cigarettes will be provided to the Nation per quarter, he said.
The rest of the cigarettes sold in the state will require the tax stamps, he said.
The Nation’s decision to move its manufacturing facility is just one way Indian tribes are responding to the state law. The Seneca Indian Nation recently filed litigation attempting to block the state from collecting the tax, and the six Iroquois nations decided to formally ask President Barack Obama to intervene.
Carmen said the Oneidas are still keeping all options on the table including joining the Seneca Indian Nation lawsuit, filing their own litigation or joining in the request for Obama to intervene.
The 15 jobs at the Sovereign Tobacco plant currently located in Angola, near Buffalo, will move to the new location on Territory Road off of state Route 46 in the Madison County city of Oneida, where the Nation once operated a bingo hall.
A transition to the Oneida facility is currently taking place, and production will begin at the new location by the end of September, officials said Wednesday. An inventory was built up at the Angola factory to avoid a lag in supply, Carmen said.
Sovereign Tobacco manufactures Niagara’s and Bishop discount cigarette brands that sell at Indian-owned stores for about half the cost of taxed, name-brand cigarettes sold in non-Indian outlets.
When the Nation’s $6.6 million purchase of the Angola manufacturing facility was officially announced nearly a year ago, officials said it would be completed by October of this year. Carmen said Tuesday that the purchase has been finalized.
The American Cancer Society last year was critical of the Oneida Nation’s entry into the cigarette-manufacturing business, saying that by making and selling cigarettes on tribal land, the Nation would be evading the sales-tax law.
Indian reservations have become a growing source of sales of cigarettes, which the government determined nearly 50 years ago can cause cancer.
The Nation already runs Turning Stone Resort and Casino, a dozen SavOn gas station-convenience stores, a gaming software company and five golf courses.
It sells about $34 million of untaxed cigarettes a year at its stores.